Permit issued for deepwater drilling as oil prices start climbing

The first permit for offshore, deepwater drilling in months was recently issued, just as gas prices are rising. Image from Wikimedia Commons.

The Obama administration has granted a permit for offshore oil drilling to Noble Energy. It is the first offshore drilling permit in months, as offshore drilling operations were put on hold after the BP oil spill. The decision was timely, as oil and gas prices are rising because of political turmoil in the Middle East.

First permit for offshore drilling issued in months

For the first time since the national moratorium on offshore drilling was lifted in October, 2010, the first permit for offshore drilling has been granted by the government, according to the New York Times. The Department of the Interior granted Noble Energy a permit; the permit is technically a re-issue, not permission to start drilling at a new site. Noble has a deepwater drilling rig off the coast of Louisiana that was ordered to suspend operations after the Deepwater Horizon explosion and oil spill in April of 2010. With the new permit, the company is able to resume drilling operations. The rig drills at about 6,500 feet below the surface.

Long wait for permits slammed by judge

The Noble Energy permit was granted a week after federal Judge Martin Feldman, from a court in Louisiana, ordered the Obama administration to process oil drilling permit applications more quickly. However, Michael Bromwich, the Director of the Bureau of Ocean Energy Management, Regulation and Enforcement insisted that the delay was not due to a political agenda and disagreed with the ruling. There are six more permits pending for deepwater drilling operations, though there have been 37 permits issued for shallow offshore drilling. The news that a permit had been issued also led to a moderate rise in energy stocks for companies with stakes in offshore drilling, according to Reuters.

Gas prices rising

Political turmoil in the Middle East has led to a nearly consistent rise in gas prices over the past few weeks, according to CNN. Oil prices have fluctuated, but there have been guarantees from oil producing states, such as Saudi Arabia, that any drop in production would be made up. Despite those guarantees, the ongoing Libya protests and similar situations in Bahrain, Oman, Yemen and Jordan have not inspired great confidence. Gasoline prices rose by 20 cents over the last week of February, marking a 27-cent rise in the cost of gasoline over the month of February. The average price of gasoline is sitting at $3.34 per gallon, well short of the national high of more than $4.11 in July 2008.